R B NARAIN SINGH SUGAR MILLS LTD Vs. COMMISSIONER OF SALES TAX U P

JUDGEMENT

(1.) THE assessee, M/s. R. B. Narain Singh Sugar Mills Ltd. of Lhaksar, District Saharanpur, was assessed to sales tax under the Central Sales Tax Act for the assessment year 1957-58. During the assessment proceedings a contention was raised before the Sales Tax Officer that the turnover of Rs. 1,90,819.25 was exempt from Central sales tax inasmuch as it consisted of sales made to dealers in Jammu and Kashmir and therefore must be considered as made in the course of export outside the territory of India. The submission rested on the fact that the Central Sales Tax Act had not been made applicable in the State of Jammu and Kashmir. That contention was accepted by the Sales Tax Officer. The Commissioner of Sales Tax applied in revision. The revision application has been allowed by the Additional Judge (Revisions) Sales Tax, who has held that the turnover was clearly taxable under the Central Sales Tax Act. At the instance of the assessee, the following question has been referred to this Court for its opinion :-

(2.) IT is true that at the relevant time the Central Sales Tax Act extended to the whole of India except the State of Jammu and Kashmir. The question is whether the sales effected by the assessee to dealers in the State of Jammu and Kashmir were liable to tax under the Central Sales Tax Act. Section 3 of the Act determines when a sale is said to take place in the course of inter-State trade or commerce, and one of the cases in which such a sale takes place is when the sale occasions the movement of goods from one State to another. Now, it cannot be doubted that the State of Jammu and Kashmir is a State for the purpose of this provision. It is one of the States referred to in Article 1 of the Constitution. Article 1(1) provides that India shall be a Union of States and Article 1(2) declares that the States are those specified in the First Schedule. The State of Jammu and Kashmir is mentioned at serial No. 15 of the First Schedule. Therefore, so far as section 3 of the Central Sales Tax Act is concerned, if a sale occasions the movement of goods from any State to the State of Jammu and Kashmir, it will be a sale in the course of inter-State trade and commerce.

(3.) LEARNED counsel for the petitioner sought to raise a further contention before us. It was urged that inasmuch as the rate of tax imposed in respect of inter-State sales entered into by a dealer in the State of Uttar Pradesh with a purchaser in the State of Jammu and Kashmir resulted in the application of a higher rate of tax under section 8(2), while an inter-State sale by that dealer to a purchaser in some other State over which the Central Sales Tax Act operated would attract the lower rate of tax prescribed in section 8(1), an unconstitutional discrimination is effected between the transactions falling in the two categories and, therefore, there is a contravention of Article 14 and Article 301 of the Constitution. The argument in substance is that the provisions of section 8(2), to the extent that they enable the application of a higher rate in respect of transactions effected by a dealer in the State of Utter Pradesh with a dealer in the State of Jammu and Kashmir, are ultra vires. It is well settled now that it is not open to an authority created under the statute to pronounce upon the vires of a provision of that statute : see R. S. Venkataraman v. The State of Madras ([1966] 17 S.T.C. 418.). If the Additional Judge (Revisions) Sales Tax was not entitled to entertain that question, we are also not competent to do so in the instant proceeding which is merely a reference arising out of an order of that authority. We must, therefore, decline to entertain this contention of the petitioner.